USF program helps students manage money, debt

TAMPA — Six business students sat in a classroom at the University of South Florida, facing a screen with concern and curiosity. They were ready to graduate, and the reality of the massive amounts of money they'd borrowed was sinking in.

A question appeared on the screen.

How many of you know how much you have borrowed?

The students could text-message their answers — yes, yes, no, three holdouts.

"Once you are all finished, that 'no' answer will be completely gone," said USF's associate financial aid director Dameion Lovett. He flipped to the next slide.

• • •

The headlines are everywhere: Astronomical student debt. Job market uncertainty. Rising tuition. A gluttonous system that encourages students to borrow now and worry later.

USF is trying to guide students through their money troubles. The school's Office of Financial Aid and Office of Student Success are launching programs to help students manage cash in an unprecedented economy, where student loan debt has surpassed $1 trillion and people owe more on education than on cars and credit cards.

Researchers from the Federal Reserve Bank of New York recently said student loan debt could have lasting effects, preventing today's graduates from borrowing for homes and other big purchases later on.

Some in Congress have proposed forgiving student debt after 10 years and capping interest rates. Under President Barack Obama's proposed budget, interest rates on federal student loans would drop in the short term but could go up without caps over time. Last year, Congress worked to freeze interest rates for the poorest students, preventing them from doubling for a year.

Average student loan debt in the United States is $26,600, according to the nonprofit Institute for College Access & Success. In Florida, it's $23,054. At USF's Tampa campus, it's $22,077. More than half of those USF students graduate with debt.

"We want to reduce that," said USF provost Ralph Wilcox. "We don't want any of our students leaving the university, out into the workforce with the added burden not just of finding a job, but now they have to worry about paying off that debt."

Previously, USF targeted freshmen with a 45-minute Web program supplied by an outside vendor. It touched on everything from alcohol prevention to campus safety to credit cards. The school wanted something bigger and better.

Financial aid staff did research and met with leaders from Texas Tech University, which has a money counseling program called Red to Black. They found the best results happened when students helped students, removing the intimidation of an unfamiliar business person in a suit.

Starting this fall, trained USF students will work out of a campus storefront as free financial counselors for their peers. USF will pay for the program using tuition reserves — the students' own money.

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"For some of these students, depending on their backgrounds, they've never seen this much money handed over to them in their lives," said Billie Jo Hamilton, USF's financial aid director. "The students are going to have to be a little forthcoming about what they're doing."

Maybe they're paying for a meal program but going home to eat every weekend. Maybe they're paying for a car but taking the bus. Maybe they need to work 10 hours a week to cover bills, and they need a reference to the career center.

"We want to sit down with the students and give them the tools and guide them through a budget adjustment," Hamilton said. "We can help you."

• • •

Word was trickling out on campus. On the first day of loan counseling this month, two students showed. By the next day, the group had grown to six.

Lovett reviewed basic financial terms that someone might be shy to ask about — lender, loan servicers, principal, interest, capitalization.

The students learned about forbearance, deferment, consolidation, building credit scores. They also learned about repayment plan options — standard, graduated, extended, income-based, income contingent, income sensitive, pay as you earn.

"Is there a calculator that will show you what your payments will be over time?" asked Shane Parker, a 30-year-old USF senior.

"There are calculators for all this," said Lovett. "It's wonderful."

It's hard to have a loan discharged, Lovett said, even in bankruptcy. And there are serious consequences to going into default, including wage and tax return garnishment.

"They'll find you and get that money one way or another," he said.

Christine Kearns has been in and out of school since 1994 while running a New Port Richey pet sitting business, she said. Attitudes about debt have changed since she started.

"There was this whole ideal back then of don't worry about it," said Kearns, 37.

She had already gotten her first student loan bill, she said, weeks before graduation. Somewhere along the way, her grace period must have lapsed.

"You might want to contact them for forbearance for six months," Hamilton told her. They talked about consolidation, what to do and not do.

Another question appeared on Lovett's screen.

Was the review of repayment options helpful to you in planning how you will manage repayment?

A yes. A yes. Another yes.

Stephanie Hayes can be reached at shayes@tampabay.com or (813) 226-3394.